Changing the 150-credit rule for CPAs is key to addressing shortages
Julie Blaha | February/March 2024 Footnote
Everyone in the public finance profession is feeling pressure these days. From certified public accountants to local government auditors and municipal clerk-treasurers, finance professionals are in short supply.
There’s no need to panic, but we must admit we’re looking at a looming crisis. We need a wide, multipronged approach to facing a shortage of public finance professionals. A solid start is rethinking the “150-hour” rule that requires 150 higher education credit-hours before receiving CPA licensure.
Last fall, the Financial Times reported on the movement in Minnesota to change CPA licensure. As the publication pointed out, this movement has grown out of a wave of baby boomers hitting retirement during a time of declining accounting enrollments in college.
Legislation proposed by the MNCPA would, in fact, broaden the pathways to CPA licensure. Specifically, it would allow an accountant to sit for the CPA license with 120 credit-hours along with two years of work experience.
I fully support this legislation.
The shortage of public finance professionals is a national issue. Bloomberg reported last year that “cities’ credit ratings are at risk” because of staffing shortages in auditing firms. Cities as large as Sante Fe, New Mexico, and Jersey City, New Jersey, were put on a negative credit watch at the time of their reporting. Bloomberg also points out staffing shortages exist within government financial departments.
As the executive branch that provides financial oversight to local governments, we see these as red flags.
Minnesota is not immune from the effects of the shortage. From volunteer fire relief associations to soil and water districts, municipal entities are now struggling to find and hire auditing firms. Not a week goes by in my office without a call from a municipality requesting help securing an affordable audit. The demand for public accounting is as strong as ever, but the supply is struggling to keep up.
Case in point: The challenges facing charter schools will seem all too familiar to local government officials. In June, the Minnesota Association of Charter Schools surveyed 180 schools. Of those that responded, 29% of charter schools reported being dropped by their auditor for FY 2023. Of the schools dropped by their auditor, 72% reported still not having found a new auditor by the end of the summer.
Widening pathways into public finance will not solve the shortage on its own.
Everyone in public finance has a role to play. At the Office of the State Auditor, we are evaluating audit requirements to streamline and modernize local government oversight. By recalibrating which entities need which types of engagements, rethinking the frequency of some audits and realigning deadlines, our goal is to not only streamline government but also take pressure off a public finance sector already stretched thin.
To all the financial professionals reading this: Thank you for your work under the current pressures. Thanks also to the Minnesota Society of CPAs for taking bold action to address the shortages we face. I look forward to the work we’ll do together to keep the profession strong.
Julie Blaha has been the Minnesota State Auditor since first being elected in 2018.
